If entrepreneur and Tesla Inc. CEO Elon Musk chooses to end his proposed $44 billion acquisition of Twitter Inc., it would rank as one of the largest failed deals in the technology and telecommunications sector.
It would also be one of the few large deals that failed for reasons not related to regulatory scrutiny.
Many have debated Musk's motives in pursuing Twitter, but speculation about the deal's prospects reached a crescendo on June 6 after Musk accused Twitter of breaching its responsibilities under the merger agreement by failing to provide him with requested data. Specifically, Musk has been skeptical regarding the estimates of spam or fake accounts on Twitter's core social platform.
In a letter to Twitter executives, Musk noted his right to walk away from the deal if Twitter fails to meet its merger-related obligations. A Twitter spokesperson said the company intended to continue working with Musk to share relevant information and move forward with the merger agreement.
It is not the first time Musk has threatened to end the deal. In May, he indicated in a tweet that the deal was "temporarily on hold," but later reconfirmed his commitment to move forward with the transaction.
Given its overall value and the assumed debt involved, the Twitter deal has been lauded as one of the largest pending tech deals to date. However, should the merger go on the chopping block, it would rank as the fourth-largest failed tech or telecom deal overall since 2002, according to data from 451 Research.
The largest on the list was the failed buyout of Canadian telecom company BCE Inc. in 2007. That deal was tabled due to a last-minute concern flagged by an outside accounting firm working on an opinion for the transaction.
Regulatory concerns ended the hopes for the second- and third-largest failed tech/telecom deals to date: Comcast Corp.'s 2014 bid for Time Warner Cable and Qualcomm Inc.'s 2016 offer for NXP Semiconductors NV.
Comcast and Time Warner Cable mutually agreed to call off their proposed merger in 2015 amid signs of mounting opposition from U.S. antitrust regulators.
Qualcomm's failed NXP deal was widely considered a casualty of souring political relations between the U.S. and China at the time.
Both of those deals would have consolidated competition in their respective sectors as opposed to Musk's going-private offer for Twitter.
Qualcomm itself was the subject of a $117 billion unsolicited takeover bid in 2018 by Broadcom Inc., which was blocked by former U.S. President Donald Trump due to national security concerns. Broadcom, previously based in Singapore, has since redomiciled its business in the U.S. in an attempt to ease such concerns.
Broadcom is now pursuing a $61 billion acquisition of Silicon Valley-based enterprise software provider VMware Inc. as it looks to diversify its business via what would rank as the third-largest announced tech deal since 2002 and second-largest this year.
Among the more recently ended large deals were NVIDIA Corp.'s proposed $33.5 billion acquisition of SoftBank Group Corp.-owned chipmaker Arm Ltd. and Zoom Video Communications Inc.'s attempted $14.7 billion buy of Five9 Inc., a cloud software provider for contact centers.
The Arm transaction, called off in February, faced "significant regulatory challenges" in the U.S., the U.K. and the European Union due to competition concerns. The Zoom-Five9 deal was called off after it failed to win the approval of a majority of Five9 shareholders.
The Twitter deal recently passed the required 30-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for transaction reviews, indicating U.S. regulators were likely to let it move forward. Twitter's board also recommended that its shareholders vote in favor of the deal. As part of the deal terms, Musk and Twitter agreed to pay either party a termination fee of $1 billion if the deal falls apart for select reasons, mostly related to regulatory and financing approvals.
451 Research is part of S&P Global Market Intelligence.